Europe stocks fail to hold Draghi-inspired gains

LONDON (MarketWatch) — European stocks ended mostly lower Thursday, failing to hold on to a rebound into positive territory after European Central Bank President Mario Draghi cited improved financial market conditions across the euro zone.

The Stoxx Europe 600 index
SXXP, +0.03%
fell 0.2% to close at 283.88, after trading as high as 286.20 after Draghi spoke.

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Among major movers in the index, shares of Alcatel-Lucent
ALU, -0.26%
gave up early gains to drop 4.9%. The telecom-equipment maker said Chief Executive Ben Verwaayen will step down from his post and the company’s board, after profit and revenue declined in the fourth quarter. See: Alcatel-Lucent CEO to step down, profit slides.

The euro tumbled as Draghi said the ECB would watch any further currency appreciation for signs its impacting the bank’s inflation outlook, although he also noted that the euro’s nominal and real exchange rates remained near long-term averages and said recent strength reflected renewed confidence in the shared currency. See: Euro tumbles ad Draghi talks it down.

“It was a fairly dovish statement and more dovish than some people had expected. It was made pretty clear that if money-market conditions start to tighten the ECB could cut rates. So it means the risk of a rate hike is not imminent,“ said Jens Larsen, chief European economist at RBC Capital Markets.

Reuters

Vodafone shares rise on Thursday after a well-received earnings report.

“We’re in a scenario where the ECB is in a position to intervene and that makes a big difference. So we are still worried about Spain and Italy, but not as much as we were a year ago,” he said.

The Bank of England also stood pat and left its left lending rate at a record low 0.5%, where it’s stood since March 2009, and maintained the size of its paused asset-purchase program at 375 billion pounds ($587.4 billion).

The U.K.’s FTSE 100 index
UKX, +0.41%
dropped more than 1% to 6,228.42, with shares of luxury-goods firm Burberry Group PLC
BRBY, +2.88%BURBY, +3.37%
off 6.5%. The company said Executive Vice President and Chief Financial Officer Stacey Cartwright will step down to pursue other interests, after more than nine years with Burberry. See: Burberry CFO steps down.

Spanish auction

Spain’s financial markets were also in the limelight as the government reportedly sold 4.6 billion euros ($6.25 billion) in public debt, above the €3.5 billion to €4.5 billion target range. Borrowing costs, however, went up compared with previous auctions as political uncertainty over a corruption scandal hampered investor confidence in the country. See: Spanish PM says corruption claim false: reports

In the secondary market, the yield on 10-year Spanish government bonds
ES:10YR_ESP
fell 0.02 percentage point to 5.40%, according to electronic trading platform Tradeweb.

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